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Performance and activities in Vodafone Equity and Bond Fund
Overview
The global financial markets faced another quarter dominated by monetary policy changes and conflicts in global trade. On the one hand the main central banks reassessed their monetary policy stance to buoy once again the markets. On the other hand renewed tensions in the US-China trade conflict and a potential conflict between the US and Iran sent markets the other way.
Development of the funds
The above manifested itself with a negative performance for the Vodafone Equity Fund in May, however this was more than offset by the performance during the first half of the year and a positive performance in June. As a result the Vodafone Equity Fund finished the first half of the year with a positive performance of 14.0%.
A higher risk aversion led to a higher demand in fixed income investments. This benefited the Vodafone Bond Fund which managed to close the first half of the year with a return of 4.5%.
The Vodafone Cash Fund managed to return 0.7% over the first half of the year and was slightly ahead the total return of short-dated Eurozone government bonds.
Fund structure
The inclusion of listed property and listed infrastructure investments in the Vodafone Equity Fund curtailed the losses from the fall in equity prices in May. This is a testament to the diversification properties of the Fund, which strategically invests in the above asset classes since we changed the structure of the fund in order to harvest different drivers of return.
In the Vodafone Bond Fund we were able to invest in the secure income fund 15 months ahead of schedule. Despite very strong interest in the market, we were able to place a successful bid and fill the entire allocation of 12%. The secure income fund not only delivers a stable flow of income returns but is robust to short-term market volatility. Given the inflation-indexation nature of the cash flows, it provides inflation protection to member’s contributions in the Vodafone Pension Plan in an inflationary environment.